On September 23, 2019, the IRS and Department of the Treasury
published final regulations regarding hardship
distributions for certain qualified retirement plans, including
401(k) and 403(b) plans.
The final regulations generally mirror the proposed regulations
issued by the IRS and Treasury in late 2018.
This update provides a brief summary of key changes to the
hardship rules and a list of effective dates and action items for
plan sponsors.
Key changes to the hardship rules
Elimination of six-month suspension
Effective January 1, 2020, plans may no longer impose a
six-month suspension on participants who take hardship
distributions. Although elimination of the six-month suspension is
not required until January 1, 2020, plan sponsors may eliminate the
suspension earlier than that date.
